Despite its potential, online auto lending remains a small niche - so small that no real ranking exists of where the players stand in relation to each other.
'Because the definition of what is meant by `online financing' is so varied, it's almost impossible to analyze or rank the players with any kind of accuracy,' said Art Spinella, vice president of CNW Marketing/Research of Bandon, Ore.
Some pieces of the Internet's influence on the auto industry are easy enough to quantify. In the first quarter of this year, 4.7 percent of all new vehicles were sold through an online buying service, up from 2.7 percent a year earlier, according to J.D. Power and Associates, the market research firm in Agoura Hills, Calif. That is a pretty clear-cut number, and those customers can be quantified.
PLENTY OF PROBLEMS
But rating online finance players is fraught with problems. For example, when should a shopper become a statistic?
Imagine this: A potential new-car buyer goes online to several Internet sites to research interest rates. He or she may go so far as to submit an application to one or more lenders. Rate in hand, he or she then logs off and heads to a brick-and-mortar institution - which may or may not be affiliated with the Internet purveyor he visited - to sign the paperwork.
Or a customer may agree to get financing from an online lender and head to the dealership with a draft, often called a 'blank check.' But the online approval goes unused if the dealer 'flips' the customer into an indirect loan, which provides a better profit. Factory incentives also may enable a captive finance company to offer a better deal.
'Forbes Best of the Web,' a regular feature of Forbes magazine, routinely ranks auto purchasing sites, and those ratings do take the financing component into account, said 'Forbes Best of the Web' editor Matthew Schifrin.
'Most auto buying sites have a financing component, whether it's their own financing or a link,' he said. 'And certainly content is one of the important criteria we consider when we measure Best of the Web.'
Forbes ranked Greenlight.com as the best way to purchase a car online. Finance options were a factor. Greenlight has partnerships with Chase Manhattan Bank, E-LOAN.com and subprime lender AmeriCredit Corp. Greenlight says its customers can apply for a loan online or over the phone, or Greenlight will help arrange financing through its partner dealerships.
But Forbes' editors have not ranked sites that deal strictly with auto financing - mostly because there are not enough of them to make a viable ranking. 'It's a hard category to focus on because there are not very many pure-play sites that deal only with auto financing,' Schifrin said.
A 'pure-play' site is one that offers a single service - financing, for example. Greenlight.com would not be considered such a site for auto financing because financing is only one of the functions available there.
Online auto finance Web sites include: getsmart.com, of Burlingame, Calif. (cars and homes); giggo.com, Fort Worth, Texas (cars only); E-LOAN.com, Dublin, Calif. (cars and homes); Peoplefirst.com, San Diego (cars only); Lendingtree.com, Charlotte, N.C. (cars and homes); and Carlender.com (cars only), Miami. Captive finance companies and banks also offer on-line lending functions.
Ranking the sites by hits, or the number of visitors, is problematic as well. The Web site getsmart.com had 3 million users in August, said Jeff Moulton, an analyst with PC Data Online.
But the number of hits does not mean getsmart.com is processing the most auto loans, or that getsmart's customers are satisfied.
'We don't know what's going on behind closed doors,' Moulton said. 'Ultimately, only they know what is being generated as far as revenue goes and how many loans they are writing up.'
PC Data Online gathers data on Web usage, including purchases, from a research panel of 120,000 participants. They can determine what Internet sites a user has visited, how long he or she has stayed and whether or not he or she has made any purchases. PC Data uses this information to produce a list of top Web sites and Web properties weekly and monthly. They also produce reports, many with an e-commerce focus, for subscribers.
The search directory Top9.com ranks the most popular sites by industry category each month, according to how many unique users each site has. Top9 is a business venture of Omega World Travel and gets its data from PC Data Online.
Top9.com has categories for the top-visited sites for auto buying, auto companies, auto parts and service, and auto industry news, but not for auto lending sites. Anyway, the number of hits is not a true ranking of business success, Spinella said.
'It doesn't tell who is dominant in the market at any one time,' he said. 'It doesn't talk about contracts.'